Phonejockey v. Rinella ( 2016 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
PHONEJOCKEY LAND PARTNERS NO. 1, LLC, a Wyoming limited
liability company; PHONEJOCKEY INVESTORS NO. 4, LLC, a Wyoming
limited liability company; ADVANTAGE OFFICE SUITES NO. 6, LLC, a
Wyoming limited liability company; JUDSON C. BALL,
Plaintiffs/Appellants,
v.
RICHARD RINELLA, JR., Defendant/Appellee.
No. 1 CA-CV 15-0051
FILED 10-13-2016
Appeal from the Superior Court in Maricopa County
Nos. CV2011-014515, CV2011-016116, CV2012-053571, CV2012-053572,
CV2013-012882 (Consolidated)
The Honorable Patricia A. Starr, Judge
AFFIRMED
COUNSEL
Hovore Law, PLLC, Scottsdale
By F. Thomas Hovore
Counsel for Plaintiffs/Appellants
Dickinson Wright PLLC, Phoenix
By James S. Rigberg, Laura R. Curry
Counsel for Defendant/Appellee
PHONEJOCKEY et al. v. RINELLA
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Peter B. Swann delivered the decision of the court, in
which Judge Lawrence F. Winthrop and Judge Donn Kessler joined.
S W A N N, Judge:
¶1 The superior court entered summary judgment in favor of
the defendant on defamation, false light, and tortious interference claims.
We affirm. Separate arbitration proceedings established that the
defendant’s statements caused the plaintiffs no damage and were
substantially true, and on this record we see no barrier to attaching
preclusive effect to those determinations.
FACTS AND PROCEDURAL HISTORY
¶2 Judson C. Ball is the founder and manager of several
Wyoming limited liability companies, including Phonejockey Land
Partners No. 1, LLC (“PJLP-1”), Phonejockey Investors No. 4, LLC (“PJI-
4”), and Advantage Office Suites No. 6, LLC (“AOS-6”) (collectively, “the
LLCs”). Richard Rinella, Jr.’s father is an investor in the LLCs.
¶3 Richard Rinella, Jr., (who is not an investor) made
statements about Ball and the LLCs to his father and to John R. Norton
and Roger Stevenson, who served as trustee and successor trustee of
another investor, the Norton Family Living Trust Dated 2/15/96 (“the
Norton Trust”). Rinella told his father and Norton that the LLCs were
“doomed for failure” and that Ball had “mismanaged” them and was
“incompetent and uninformed.” Rinella also stated, in an e-mail to
Stevenson, that a forensic audit “would allow us to determine the
misappropriation of funds by [Ball].” According to Ball, Stevenson
“subsequently began obstructing the business relationship between
Norton and the [LLCs],” and Rinella’s statements also “[e]ncouraged”
Norton to begin “undermining” Ball. Ball filed an action against Rinella
for defamation and false light invasion of privacy, and, on behalf of the
LLCs, filed an action against Rinella for tortious interference with business
relationships and contract.
¶4 Around the same time, the Norton Trust commenced
arbitration proceedings against the LLCs and Ball related to his
management. Rinella was not a party to those proceedings. In the
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PHONEJOCKEY et al. v. RINELLA
Decision of the Court
arbitration, Ball asserted counterclaims against Norton and Stevenson for
defamation and tortious interference. The three-person arbitration panel
concluded that Ball had inappropriately taken over $150,000 in finder’s
fees from PJLP-1 and PJI-4, and had inappropriately taken an $80,000
development fee from PJI-4. The panel further concluded:
[T]he evidence does not establish by a preponderance
Respondents’ counterclaims for tortious interference or
defamation, or that Claimant[’]s actions were not subject to a
qualified privilege. Even if Respondents were deemed to
have established tortious interference or defamation, and
even if Claimant’s actions were not protected by a qualified
privilege, Respondents[’] alleged damages were pure
speculation and Respondents did not establish by a
preponderance of the evidence any quantifiable financial
loss proximately caused by any of the alleged wrongful acts
of Claimant.
¶5 Soon after the arbitration award issued, Rinella moved for
summary judgment on all claims against him. Relying on issue
preclusion, Rinella argued that he could not be held liable for defamation
and false light because the arbitration award’s decision regarding finder’s
and development fees showed that his statements were substantially true.
He further argued that he could not be held liable for defamation or
tortious interference because the arbitrators had determined that the
actions of Norton and Stevenson, which allegedly derived from Rinella’s
statements, caused no damages. And finally, Rinella argued that his
statements were protected under a qualified “common interest” privilege.
¶6 The court granted summary judgment for Rinella,
concluding that “[b]ecause the arbitration panel found that no damages
resulted from Norton and Stevenson’s actions, which were taken based on
[Rinella]’s statements, [Rinella] cannot be held liable for damages in this
action.” The court further held that Rinella’s statements were protected
by the common interest privilege.
¶7 The court entered judgments dismissing all of the claims
against Rinella. Ball and the LLCs appeal.
DISCUSSION
¶8 We review the application of issue preclusion de novo.
Campbell v. SCZ Props., Ltd., 204 Ariz. 221, 223, ¶ 8 (App. 2003). Further,
we review the grant of summary judgment de novo, viewing the evidence
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Decision of the Court
and reasonable inferences in the light most favorable to the non-moving
party. Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12 (2003). We will affirm the
superior court’s grant of summary judgment if the decision is correct for
any reason. Glaze v. Marcus, 151 Ariz. 538, 540 (App. 1986).
¶9 Issue preclusion binds a party to a decision on an issue
litigated in a previous lawsuit if:
(1) the issue was actually litigated in the previous
proceeding, (2) the parties had a full and fair opportunity
and motive to litigate the issue, (3) a valid and final decision
on the merits was entered, (4) resolution of the issue was
essential to the decision, and (5) there is common identity of
the parties.
Campbell, 204 Ariz. at 223, ¶ 9. Significantly, the last element, regarding
common identity of the parties, is not required when the doctrine is used
defensively. Id. at ¶ 10. If the other elements are satisfied, a defendant
may invoke issue preclusion to preclude the plaintiff from relitigating an
issue that the plaintiff previously lost against a different party. Id.
¶10 Further, the parties do not dispute that issue preclusion may
apply to issues decided in an adequate arbitration proceeding. See
Restatement (Second) of Judgments § 84. Issue preclusion may attach to
an arbitration decision when it is not inconsistent with a legal policy or
contractual provision authorizing the court to make an independent
determination on the issue, or with a specially expeditious arbitration
scheme that lacks the elements of adjudicatory procedure. Id. Ball and the
LLCs cite Clark v. Bear Stearns & Co., Inc., 966 F.2d 1318, 1321 (9th Cir.
1992), for the proposition that issue preclusion may not apply to an
arbitration proceeding unless that arbitration award’s findings are the
only rational ones. But Clark merely held that the existence of an implied
finding must be proved by evidence that it is the only rational finding the
factfinder could have made. Id. Clark did not hold that the court may
circumvent issue preclusion by independently assessing the merits of an
arbitrator’s express findings.
¶11 Though the claims against Rinella were not decided in the
arbitration, the panel did expressly decide that Ball had accepted
inappropriate fees and that Norton and Stevenson’s conduct caused no
actual damages. Ball and the LLCs do not dispute that the parties to the
arbitration had a full and fair opportunity and motive to dispute the fee
and damages issues, and that they did so. They also apparently concede
that the resolution of those issues was essential to the arbitration decision,
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Decision of the Court
and that the decision was valid and final. They argue, however, that
Rinella was not a party to the arbitration and his statements were not
considered.
¶12 As an initial matter, the fact that Rinella was not a party to
the arbitration does not defeat issue preclusion, because he asserts it
defensively. And the fact that Rinella’s statements were not at issue in the
arbitration does not defeat summary judgment on this record.
¶13 First, the tortious interference claims against Rinella were
premised on allegations that his statements caused Norton and Stevenson
to take actions that harmed the LLCs. In other words, Norton and
Stevenson’s conduct constituted the LLC’s only alleged damages from
Rinella’s statements. See Dube v. Likins, 216 Ariz. 406, 411, ¶ 8 (App. 2007)
(“A plaintiff asserting a claim for tortious interference must allege the
existence of a valid contractual relationship or business expectancy; the
interferer’s knowledge of the relationship or expectancy; intentional
interference inducing or causing a breach or termination of the
relationship or expectancy; and resultant damage to the party whose
relationship or expectancy has been disrupted.” (internal quotation marks
omitted) (emphasis added)). Because the arbitration panel determined
that Norton and Stevenson’s conduct caused no harm, the LLCs could not
prevail on their tortious interference claims.
¶14 Second, the defamation and false light claims against Rinella
were premised on allegations that Rinella’s statements were false. Falsity
is an essential element of defamation and false light. See Turner v. Devlin,
174 Ariz. 201, 203-04 (1993); Godbehere v. Phoenix Newspapers, Inc., 162 Ariz.
335, 338, 340 (1989). A substantially true communication is not
defamatory. Read v. Phoenix Newspapers, Inc., 169 Ariz. 353, 355 (1991).
Similarly, a publication will not constitute false light unless it involves a
major misrepresentation. Reynolds v. Reynolds, 231 Ariz. 313, 318, ¶ 14
(App. 2013). Limited, private communications such as those alleged in
this case are inherently insufficient to create liability for false light
invasion of privacy: to be liable, the defendant must place the plaintiff
“before the public” in a false light. Godbehere, 169 Ariz. at 338;
Restatement (Second) of Torts § 652(E). In view of the arbitration panel’s
determination that Ball took substantial unauthorized fees from the LLCs
that he was tasked to manage, Rinella’s statements were at least
substantially true and Ball’s defamation and false light claims failed as a
matter of law.
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PHONEJOCKEY et al. v. RINELLA
Decision of the Court
¶15 Because the arbitrators’ findings are dispositive of plaintiffs’
claims, we need not reach the question of whether Rinella’s statements
were protected by a qualified common interest privilege.
CONCLUSION
¶16 We affirm the court’s entry of summary judgment for
Rinella.
AMY M. WOOD • Clerk of the Court
FILED: AA
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